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International Trade and Finance Law

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Coursework Assignment – International Trade and Finance Law (2014-2015)

Deadline for coursework submission: 13pm, Monday 1th December 2014.

Word limit: 2,000 words maximum*

* Maximum of 5% above the word limit without penalties.

Referencing style:

Harvard style

http://www.law.ox.ac.uk/published/OSCOLA_4th_edn_Hart_2012QuickReferenceGuide.pdf

https://ilrb.cf.ac.uk/citingreferences/oscola/tutorial/index.html

Answer ONE of the following three questions:

Question 1

Klausland acceded to the WTO in 2008. As a small pacific island developing country, Klausland is particularly vulnerable to the impacts of climate change. As part of its long-term national energy and climate change strategy, the government of Klausland decided to produce wind turbine technologies to meet the country’s energy needs.

As part of its programme of regulatory reform, Klausland started to apply the following trade restrictions:

1.1. ad valorem customs duties of 20 per cent on foreign wind turbine technologies; but an ad valorem customs duty of 15 per cent on solar panel technologies (which also reduce green house gas emissions)
1.2. A lower custom duty of 5% was applicable to the imports of wind turbines and solar panels from Samoa, which is a neighboring island country.

1.3. A ban on the imports of oil and gas from other countries because of concerns over the release of green house gas into the atmosphere which cause climate change.
1.4. Quantitative restriction in the form of quotas of 100 units yearly on foreign wind turbine technologies, so as to protect its local manufactures from international competition.
1.5. all the imports of wind turbine or solar panel technologies had to take place in the port of Didier, in the north of Klausland.
1.6. A customs handling fee of 1 per cent was applicable in all imports into the country, with the view of supporting local social and environmental projects.

Moreover, in general Klausland applied an internal tax of 20% on domestic sales of both domestic and foreign manufactured wind turbines and solar panel technologies. However:

1.7. A lower tax rate of 15% was applicable to domestic sales of wind turbines manufactured in the neighboring country Samoa; or by the state-owned energy company Madras.
1.8 It exempted from internal taxes any wind turbine or solar panels, both domestically and internationally produced, which contained fewer assembly parts making it easier for them to be recycled after decommissioning.

Furthermore, the national law in Klausland required that:
1.9 A minimum sales price requirement of at least $5,000 per unit for all wind turbines sold in the country
1.10 Government bodies must use only nationally produced solar panels in government departments and offices.

Despite the trade restrictive measures introduced by Klausland, the national manufacturers are still unable to compete with foreign manufacturers of wind turbines and solar panel technologies, who maintain 70% share of the domestic market. The domestic manufactures then start to lobby the government of Klausland to impose the following measures:

1.11. Impose anti-dumping duties on three of the main exporter countries of wind turbines and solar panels to Klausland.
1.12. Impose counter-veiling duties on wind turbines from China, whose government is suspected to be subsidizing its local manufacturers of wind turbine technologies.

An eminent international trade lawyer, you are asked to give legal advice to the government of Klausland on the legality of the above mentioned measures under international trade law.

Indicative Reading:

Michael J. Trebilcock and Robert Howse, The Regulation of International Trade, 4th Edition, (Routledge, 2013), chapters 2, 4, 7, 9 and 10

Matthias Herdegen Principles of International Economic Law (OUP, 2013), chapter 14

Ray A. August, Don Mayer, Michael Bixby, ‘International Business Law: Texts, Cases and Readings’ (Pearson, Prentice Hall, 2013, sixth edition), chapters 8 and 9

Peter van den Bossche, the Law and Policy of the World Trade Organisation: Text, Cases and Materials, (Second ed., Cambridge University Press 2013, third edition); chapter 4; ); chapters 5-6

L Brink and D Ikenson, ‘Reforming the Anti-Dumping Agreement: A Road Map for WTO Negotiations’ (2002) 21 Trade Policy Analysis No. 21.

Lowe, A. International Economic Law (OUP, 2008), chapters 3-5; chapters 9-10

J. Qin, ‘Defining Non-discrimination under the law of the world trade organisation’ (2005) 23 BU Int’ LJ 215

J. Neumann and E Turk, ‘Necessity Revisited: Proportionality in World Trade Organisation Law After Korea-Beef, EC-Abestos and EC-Sardines’ (2003) 37 Journal of World Trade, 199.

R. Howse and J. Jangille, ‘Permitting Pluralism: The Seal Products Dispute and why the WTO should accept trade restrictions based on non-instrumental moral values’ (2012), 37 Yale Journal of International Law 2.

P.E. Veel, Carbon Tariffs and the WTO: An Evaluation of Feasible Policies’ (2009) 12 Journal of International Economic Law 738-800

H. Wright and R. Pereira, A Legal Framework for Clean Technology Transfer and Finance, in K. Makuch and R. Pereira (eds.) Environmental and Energy Law, (Wiley-Blackwell, 2012)

Some Key WTO cases:

WTO. Japan: Taxes on Alcoholic Beverages – Report of the Appellate Body (1996) WT/DS8/AB/R, WT/DS10/AB/R

WTO, Philippines: Taxes on Distilled Spirits – Report of the Appellate Body (2011) WT/DS403/AB/R.
WTO, United States: Import Prohibition of Certain Shrimps and Shrimp Products – Report of the Appellate Body (1998) WT/DS58/AB/R

WTO, China: Measures Related to the Exportation of Various Raw Materials – Report of the Panel (2011) WT/DS394/R, WT/DS395R and WTDS386/R

Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 Dec 2007, DSR 2007:IV, 1527.

WTO, European Communities and Certain Member States: Measures Affecting Trade in Large Civil Aircraft – Report of the Appellate Body (2011), WT/DS316/AB/R

WTO, United States: Measures Affecting Trade in Large Civil Aircraft – Report of the Appellate Body (2012), WT/DS353/AB/R

Question 2

‘The adoption of the Bali Agreement in December 2013 was only a modest development towards the liberalization of world trade. The WTO Doha Round of Negotiations has so far failed to reform WTO law for further liberalization of trade in agricultural products, in particular the phasing out of subsidies which prevent the access of producers in developing countries to the markets of developed countries. Moreover, Doha has so far failed to address the intricate questions surrounding further liberalization of trade in services; and the strengthening of the global regime governing the protection of intellectual property rights, which needs to be reconciled with the interest of developing countries to gain access to vital patented drugs developed by foreign pharmaceutical companies.”

Critically discuss the above statement.

Indicative reading

Michael J. Trebilcock and Robert Howse, The Regulation of International Trade, 4th Edition, (Routledge, 2013), chapters 8, 12-14, 17, 21

Ray A. August, Don Mayer, Michael Bixby, ‘International Business Law: Texts, Cases and Readings’ (Pearson, Prentice Hall, 2013, sixth edition), chapters 8 and 9

Bali Ministerial Declaration and Decisions: http://wto.org/english/thewto_e/minist_e/mc9_e/balipackage_e.htm

Peter van den Bossche, the Law and Policy of the World Trade Organisation: Text, Cases and Materials, (Second ed., Cambridge University Press 2013, third edition); chapter 8 (pp. 805 -)

Lowe, A. International Economic Law (OUP, 2008), chapter 11

Matthias Herdegen Principles of International Economic Law (OUP, 2013), chapters 15-18 & 27-28

Peter van den Bossche, the Law and Policy of the World Trade Organisation: Text, Cases and Materials, (Second ed., Cambridge University Press 2013, third edition); chapter 8 (pp. 742-802)

Lowe, A. International Economic Law (OUP, 2008), chapters 6 & 12

D Das, ‘The Doha Round of Multilateral Trade Negotiations and Trade in Agriculture’ (2006), 40 Journal of World Trade 259

T Beierle, ‘Agricultural Trade Liberalisation – Uruguay, Doha and Beyond’ (2002) 36 JWT

D Coppens,’WTO Disciplines on Export Credit Support for Agricultural Products in the Wake of the US-Upland Cotton Case and the Doha Round of Negotiations’ (2010) 44 Journal of World Trade 349

H. Wright and R. Pereira, A Legal Framework for Clean Technology Transfer and Finance, in K. Makuch and R. Pereira (eds.) Environmental and Energy Law, (Wiley-Blackwell, 2012)

ME Footer and C George, ‘The General Agreement on Trade in Services’ in PFJ Macrory, A. Appleton, and M Plummer eds. The World Trade Organisation: Legal, Economic, and Political Analysis (Springer, 2005)

M. Yoloi-Arai, ‘GATS Prudential Carve Out in Financial Services and its Relation with Prudential Regulation’ (2008) 57 International and Comparative Law Quarterly 623.

T. Voon, ‘Patents and Public Health in the WTO, FTAs and Beyond: Tension and Conflict in International Law’ (2009) 43 Journal of World Trade 571

FM Abbott, ‘The WTO Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health’ (2005) 99 American Journal of International Law 317.

Some key WTO case-law:

WTO, United States: Subsidies on Upland Cotton – Report of the Appelate Body (2005), WT/DS/267/AB/R

WTO, European Community: Subsidies on Exports of Wheat Flour SCM/42 21 March 1983

WTO, France: Assistance to Exports of Wheat and Wheat Flour BISD 75/46 (1959)

WTO, United States: Measures affecting the Cross-Border supply of Gambling and Betting Services – Report of the Appellate Body (2005) WT/DS285/AB/R

Question 3

In the summer of 2007, a UK Pension Fund invests £150,000 on Collaterised Debt Obligations (CDOs) and £100,000 on shares from Baribas Ltd bank, relying on the advice of Credit Rating Agency Moody’s, which released a report giving a high credit rating (AA) to Baribas and its CDOs.

Representing a group of investors, the UK Pension Fund decides to bring legal action before the English High Court in 2012 against Baribas bank, the Credit Rating Agency Moddy’s and the UK Financial Services Authority, claiming that the following violates international, EU and UK law:

1) The investment bankers working for Baribas were incentivized to make riskier investments due to an internal banking culture that authorized higher bonuses and no penalties linked to irresponsible risk-taking.
2) Despite pressure from its shareholders and investors, Baribas has refrained from disclosing vital financial information in its annual financial reports.
3) The financial reports, released after shareholder’s action, suggested that the CDOs were based on subprime mortgages that could not be repaid. Despite being aware of this, the Credit Rating Agency Moddy’s gave the CDOs high credit ratings.
4) Baribas only held 4% capital in risk-weighed assets; and its leverage-ratio was 15:1. Baribas becomes insolvent as it had too much exposure to the CDOs, leading to the collapse of other banks and insurance companies that had exposures to or insured Baribas’ CDOs.
5) A group of depositors have tried to claim the full value of their deposits back after Baribas’ collapse, but were told that they could only receive up to 3,000 Euros.
6) Despite being aware of the excessive risk taken by some employees at Baribas, the UK Financial Services Authority has failed to take any action.

An eminent international lawyer, you are hired by the UK Pension Fund to write a piece of legal advice on the application of international, EU and UK law (including the post-crisis regulatory reforms) to the above scenario.

Indicative Reading:

Hudson, The Law of Finance (Sweet & Maxwell, 2nd ed. 2013) chapters 28 & 45 (refer also to other relevant chapters listed in table of contents)

Matthias Herdegen Principles of International Economic Law (OUP, 2013), chapters 31-39 & 42

Ray A. August, Don Mayer, Michael Bixby, ‘International Business Law: Texts, Cases and Readings’ (Pearson, Prentice Hall, 2013, sixth edition), chapter 6

Michael J. Trebilcock and Robert Howse, The Regulation of International Trade, 4th Edition, (Routledge, 2013), chapter 6

Stephen Valdez and Philip Molyneux, ‘An Introduction to the Global Financial Markets’ (Seventh ed., 2013), chapter 9

Lowe, A. International Economic Law (OUP, 2008), chapters 15-18

Basel Committee on Banking Supervision: Basel III: A Global Regulatory Framework for more Resilient Banks and Banking Systems, December 2010 (revised June 2011)
http://www.bis.org/publ/bcbs189.pdf

EU Commission Communication, ‘An EU Framework for Crisis Management in the Financial Sector’. COM (2010) 579
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0579:FIN:EN:PDF

Rosa Lastra. Legal Foundations of International Monetary Stability (OUP, 2006) chapters 4 and 14

Coskun, ‘Credit-rating agencies in the Basel II framework: why the standardised approach is inadequate for regulatory capital purposes, 2010 25 (4), Journal of International Banking Law and Regulation

Goodhart and D.Schoenmaker,’Fiscal Burden Sharing in Cross Border Banking Crises’ (2009) 5 (1) International Journal of Central Banking

Goodhart, ‘The regulatory response to the financial crisis’ Journal of Financial Stability 4 (2008) 351-358

‘A Regulatory Response to the Global Banking Crisis’ (Turner Report), Financial Services Authority, March 2009

Gary Gorton and Andrew Metrick, ‘Securitised Banking and the Run on the Repo’ NEBR Working Paper No. w15223, August 2009

Charles Kahn and Joao Santos, ‘Allocating Bank Regulatory Powers: Lender of Last Resort, Deposit Insurance, and Supervision’ (2005) 49 (8) European Economic Review 2107

R. Lastra, G. Wood, ‘The Recent Financial Crisis: Why did it happen and what lessons can it teach’ (2010) 13 (3) Journal of International Economic Law

R. Lastra, ‘Systemic Risk, SIFIs and Financial Stability’ (2011) Capital Markets Law Journal

Goodhart, The Regulatory Reponse to the Financial Crisis’ (Edward Elgar Publishing, 2010)

G. Sjoberg, Handling Systemically Important Banks in Distress – some thoughts from a Swedish Perspective, European Business Organisation Law Review 12, 2011/2012

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